Strategic Management
Spring - 2024
BBA 2 Year (4th Semester)
Department of Management Sciences
Strategy Analysis and Choice
Presented by Presented to
• Sara Batool (003) • Sir Yasir Zaman
• Eisha Rafique (009)
• Sufyan Amanat (011)
• Muhammad Saqib (013)
• Aamir Javed (037)
Learning Outcomes
1. Describe the strategy analysis and choice process.
2. Diagram and explain the three-stage strategy-formulation analytical framework.
3. Diagram and explain the Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix.
4. Diagram and explain the Strategic Position and Action Evaluation (SPACE) Matrix.
5. Diagram and explain the Boston Consulting Group (BCG) Matrix.
6. Diagram and explain the Internal-External (IE) Matrix.
7. Diagram and explain the Grand Strategy Matrix.
8. Diagram and explain the Quantitative Strategic Planning Matrix (QSPM).
9. Discuss the role of a Board of Directors (governance) in strategic planning.
1. Strategy Analysis and Choice Process
Strategy analysis and choice seek to determine alternative courses of action that could best enable the
firm to achieve its mission and objectives.
Setting Goals and Objectives – (What do you want to achieve?)
Situational Analysis – (Internal Analysis, External Analysis)
Strategy Formulation – (Generate and Evaluate Strategic Options)
Strategy Choice – (Select the Best Option)
Strategy Implementation – Develop Action Plans, Allocate Resource and Monitor
2. Strategy Formulation and Analytical Framework
Important strategy-formulation techniques can be integrated into a three-stage decision-making
framework, illustrated below.
1. Input Stage
2. The Matching Stage
3. The Decision Stage
1. Input Stage 2. The Matching Stage
i. External Factor Evaluation (EFE) Matrix i. SWOT Matrix
ii. Internal Factor Evaluation (IFE) Matrix ii. SPACE Matrix
iii. Competitive Profile Matrix (CPM) iii. BCG Matrix
Stage 1 summarizes the basic input information iv. Internal External Matrix
needed to formulate strategies. v. Grand Strategy Matrix
Stage 2 focuses on generating feasible alternative
strategies by aligning key external & internal factors.
3. Decision Stage
i. Quantitative Strategic Planning Matrix (QSPM)
Stage 3, called the decision stage, It reveals the relative attractiveness of alternative strategies & provides an
objective basis for selecting specific strategies.
3. Strengths, Weaknesses, Opportunities, Threats (SWOT) Matrix
The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix is an important matching tool that
helps managers develop four types of strategies:
i. SO (Strengths-Opportunities) Strategies
ii. WO (Weaknesses-Opportunities) Strategies
iii. ST (Strengths-Threats) Strategies
iv. WT (Weaknesses-Threats) Strategies
i. SO Strategies ii. WO Strategies
SO strategies use a firm’s internal strengths to take WO strategies aim at improving internal weaknesses by
several advantage of external opportunities. taking advantage of external opportunities.
• Organizations generally will pursue WO, ST, or WT • Sometimes key external opportunities exist, but a firm
strategies to get into a situation in which they can has internal weaknesses that prevent it from exploiting
apply SO strategies. those opportunities.
• When a firm has major weaknesses, it will strive to • This strategy aims to increase sales of existing
overcome them and make them strengths. products or services in your current market
• When an organization faces major threats, it will • This strategy focuses on creating unique value for your
seek to avoid them to concentrate on opportunities. customers that your competitors cannot match.
iii. ST Strategies iv. WT Strategies
ST strategies use a firm’s strengths to avoid or reduce WT strategies are defensive tactics directed at reducing
the impact of external threats. internal weakness and avoiding external threats.
• This does not mean that a strong organization should • An organization faced with numerous external threats
always meet threats in the external environment head and internal weaknesses may indeed be in a precarious
on. position.
• This strategy aims to increase sales of your existing • Such a firm may have to fight for its survival, merge,
products or services in your current market. retrench, declare bankruptcy, or choose liquidation.
• It leverages your existing customer base and market • Make your products or services more accessible by
understanding to grow. partnering with new retailers.
(Process of SWOT Matrix)
Constructing a SWOT Matrix
1. List the firm’s key external opportunities.
2. List the firm’s key external threats.
3. List the firm’s key internal strengths.
4. List the firm’s key internal weaknesses.
5. Match internal strengths with external opportunities, and record the result SO strategies in the appropriate cell.
6. Match internal weaknesses with external opportunities, and record the resultant WO strategies.
7. Match internal strengths with external threats, and record the resultant ST strategies.
8. Match internal weaknesses with external threats, and record the resultant WT strategies.
4. Strategic Position and Action Evaluation (SPACE) Matrix
The Strategic Position and Action Evaluation (SPACE) Matrix is another important Stage 2 matching tool.
• Its four-quadrant framework indicates whether aggressive, conservative, defensive, or competitive strategies are
most appropriate for a given organization.
• The axes of the SPACE Matrix represent two internal dimensions (financial position [FP] and competitive
position [CP]) and two external dimensions (stability position [SP] and industry position [IP]).
• These four factors are perhaps the most important determinants of an organization’s overall strategic position.
(Strategic Position and Action Evaluation (SPACE) Matrix)
[Link] Consulting Group (BCG) Matrix
The Boston Consulting Group (BCG) Matrix is designed specifically to enhance a multidivisional firm’s efforts to
formulate strategies.
The BCG Matrix graphically portrays differences among divisions based on two dimensions:
1. Relative market share position on the x-axis
Relative market share position (RMSP) is defined as the ratio of a division’s own market share (or revenues) in a
particular industry to the market share (or revenues) held by the largest rival firm in that industry.
2. Industry growth rate on the y-axis.
Industry growth rate is the average annual increase in revenue for all firms in an industry.
(Boston Consulting Group (BCG) Matrix)
1. Question Mark
Have a low relative market share position, yet they compete in a high-growth
industry. Generally these firms’ cash needs are high and their cash generation
is low.
2. Star
Represent the organizations’ best long-run opportunities for growth.
Divisions with a high relative market share and a high industry growth rate
should receive substantial investment to maintain their dominant positions.
3. Cash Cows
Have a high relative market share position but compete in a low-growth
industry. Called cash cows because they generate cash in excess of their
needs. Many of today’s cash cows were yesterday’s stars.
4. Dog
Have a low relative market share position and compete in a slow or no market
growth industry; they are dogs in the firm’s portfolio. Because of their weak
internal and external position.
6. Internal-External (IE) Matrix
The Internal-External (IE) Matrix is a business tool used to analyze the strategic position of different divisions or
business units within a company. It considers both internal factors (strengths and weaknesses) and external factors
(opportunities and threats) to give a more comprehensive picture.
Structure
It's a nine-cell grid with two axes:
X-axis represents the Internal Factor Evaluation (IFE) score, ranging from weak (low score) to strong (high
score) internal position.
Y-axis represents the External Factor Evaluation (EFE) score, indicating favorable (high score) to unfavorable
(low score) external environment.
(Internal-External (IE) Matrix)
7. Grand Strategy Matrix
The Grand Strategy Matrix is a framework used to analyze a business unit's strategic position based on two key
dimensions:
Market Growth
This indicates the growth rate of the industry or market the business unit operates in. It can range from slow or
stagnant growth to rapid growth.
Competitive Position
This reflects the business unit's relative strength compared to its competitors. It considers factors like market
share, brand reputation, product differentiation, and cost advantages.
(Grand Strategy Matrix)
8. Quantitative Strategic Planning Matrix (QSPM)
The Quantitative Strategic Planning Matrix (QSPM) is a strategic management tool used to evaluate different
strategic options and identify the most attractive one for your business.
External Factors
This section lists the key Critical Success Factors (CSFs) in the external environment, including both opportunities
and threats. These factors represent the essential elements for success in your industry.
Internal Factors
This section lists the key internal CSFs, which are your company's strengths and weaknesses. These factors
represent your capabilities and limitations.
(Quantitative Strategic Planning Matrix )
(Quantitative Strategic Planning Matrix )
9. Board of Directors
A board of directors is a group of individuals elected by the ownership of a corporation to have oversight and
guidance over management and to look out for shareholders’ interests. The act of oversight and direction is
referred to as governance.
ROLES
Setting the company's strategic direction
The board is responsible for establishing the company's long-term goals and objectives. This includes developing a
mission statement, vision statement, and strategic plan.
Overseeing the management of the company
The board is responsible for overseeing the performance of the company's management team. This includes
approving the annual budget, monitoring financial performance, and evaluating the CEO's performance.
(Board of Directors)
Protecting the interests of shareholders
The board has a fiduciary duty to act in the best interests of the shareholders. This includes ensuring that the
company is managed in a sound and ethical manner, and that shareholders are kept informed of important
developments.
Approving major financial decisions
The board is responsible for approving major financial decisions, such as mergers and acquisitions, stock
issuance, and capital expenditures.
THANK YOU!